Ozempic Will Be Up for IRA ‘Negotiation.’ Here Are The Only Four Storylines You’ll See

Last week, I gave four reasons why I was happy to be skipping J.P. Morgan this year. I should have given a fifth: 90% of the dialogue around #JPM25 -- like 90% of the dialogue from every JPM before it -- is about dealmaking, which is not remotely in Cost Curve’s wheelhouse. 

This year, people are already lining up to fete the emergent and rumored deals, all of which seem smart, none of which seem paradigm-shaking. If you’re an M&A person, it’s Christmas morning. If you’re a policy wonk, it’s just another Monday in January. 

That doesn’t mean there isn’t any policy or pricing news to be sniffed out, and I’ll have some crumbs for tomorrow, once today’s dust has settled.

It’s widely expected that later this week (probably Friday, per last week’s poll), CMS will drop the next 15 medicines due for “negotiations.” There is some uncertainty about the list, but there is one absolute slam-dunk: semaglutide will be at the top. 

Semaglutide is, of course, Ozempic/Wegovy, the most name-checked drug since Pfizer launched Viagra. There will be, conservatively, a hundred thousand think pieces written between now and Nov. 30, when the next set of “maximum fair prices” are announced. 

Those articles will all try to answer the question: “How will CMS set price controls?”

As it turns out, there are only four possibilities, and I will save you a lot of reading right now by summarizing each of those arguments.

***

ARGUMENT ONE: Nothing to See Here. 

Leaving the hype around Ozempic aside, it’s a medicine with a commercial profile that looks an awful lot like many of the first 10 drugs to be negotiated. It is a heavily rebated medicine, a medicine where net prices are dropping year over year, and a medicine whose price is well-aligned with its value. 

If the last set of price controls is any guide, the “maximum fair price” of Ozempic/Wegovy will reflect a mammoth discount off of the list price but probably not much of a haircut versus the rebate that Part D plans have already secured. 

In other words, despite a lot of rhetoric about the government using its powers to finally bring GLP-1 prices under control, it’s possible that the status quo in 2027 will look not unlike the status quo in 2025. 

ARGUMENT TWO: Revenge of the Negotiators. 

One of the themes that this newsletter has been repeating lately is that CMS hasn’t set any standards about how it approaches these “negotiations,” which means that the agency has pretty wide latitude in terms of how it sets prices. 

So you could make the case that CMS will argue Ozempic deserves a low price because … reasons. Indeed, the idea that CMS could peg the price to generic Victoza is already floating out there, via this STAT story we talked skeptically about last week. 

This is probably the scenario that will generate the most wishcasting because it gets to the outcome so many are clamoring for without assuming some sort of divine intervention. 

ARGUMENT THREE: It’s All Politics. 

Speaking of divine intervention … because the CMS standards don’t really exist, it’s possible that the “negotiations” devolve into a purely political exercise. 

This could work one of two ways.

An aggressive CMS, working explicitly to deliver a win to the White House, could just lowball the Ozempic price with minimal explanation or justification. It would be a dangerous game of chicken, risking either a lawsuit or the removal of the medicine from government programs, but it’s probably not beyond the pale. 

It’s also possible that CMS will seek to torpedo the whole negotiation program by refusing to go through the process in any meaningful way, slapping the highest allowable price on the medicine and suggesting that Part D plans can keep working to push prices lower. This isn’t beyond the pale, either: former Trump administration official Joe Grogran suggested earlier this month just defunding the whole deal. 

ARGUMENT FOUR: See You in Court. 

The original 10 medicines to be “negotiated” ended up spurring a fusillade of lawsuits, none of which has been resolved on the merits. One of those suits raises an argument that has a direct bearing on what happens to Ozempic/Wegovy. 

The suit -- filed by Novo Nordisk and focused on how CMS is treating its insulins -- makes the point that CMS is making up the definition of what a “drug” is. CMS has said it will treat all versions of the same molecule as a single drug, even though the FDA often approves multiple “drugs” with the same active ingredient when there are different uses, clinical trials, doses, and regulatory filings. 

So there is a world in which courts demand that the CMS use a definition closer to that of the FDA, which could cleave off the ability to set price controls on Wegovy. Ozempic, presumably, would still get a government-mandated price, but it would be a narrower victory. 

***

My assumption is that’s it: every story you see trying to predict what the government will do with Ozempic/Wegovy is going to follow one of those four narratives, and no one will have any certainty which is right for the next 10 months or so. Instead, we’ll get the same four ideas, endlessly remixed. 

You’ve been warned. 

• The FTC is going to talk PBMs at its open meeting tomorrow. Per the meeting agenda: “The Commission will consider issuing a second interim staff report highlighting additional staff findings from the Commission’s 6(b) study on the contracting practices of pharmacy benefit managers, or PBMs.” I have no idea what the “consider issuing” phrasing means, but I’ll be tuning in. 

• Politico has the wish list of all of the cuts that Republicans would like to make to fund Trump’s agenda. It totals about $5 trillion, half of which would come from gutting federal dollars in Medicaid. This isn’t being framed as a pharma thing, but It strikes me that this would cause a cascade of events that would make medicines harder to access for beneficiaries and seriously stress state budgets. 

• Here’s more thoughtful work from Bloomberg Law’s Nyah Phengsitthy, who looked at the attendees for last summer’s IRA “negotiations” and tried to draw some conclusions about how each drugmaker approached the effort. It’s not clear that knowing the participants is all that illuminating, but CMS isn’t giving anyone much to go on. 

• The Supreme Court will hear arguments on whether the Affordable Care Act’s requirement that preventative services must be covered can be gutted. 

• YouGov has some more good data on the politicization of trust in health care, with about half of both Democrats and Republicans admitting that they trust public health officials more when their party is in power. (As an aside, pharma companies came in pretty low on the trust scale here, too.)

• Last month, I flagged a study in The Lancet that suggested that the UK’s health system would have been better off not covering any new drugs. Here’s a compelling takedown of that paper from health economist Chris Sampson.

Cost Curve is produced by Reid Strategic, a consultancy that helps companies and organizations in life sciences communicate more clearly and more loudly about issues of value, access, and pricing. We offer a range of services, from strategic planning to tactical execution, designed to shatter the complexity that hampers constructive conversations. 

To learn more about how Reid Strategic can help you, email Brian Reid at [email protected].